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Buying and Selling Successfully on eBay
Part Four

Protecting Yourself

by Deborah Gray

Online auctions are the number one source of online fraud, according to the FBI. eBay's popularity in itself makes it the biggest target in the field. The company maintains that 99.99% of auctions are trouble-free, but that's not much of a consolation if are in the remaining .01%.

For quite a while, eBay's response to member concerns was that it felt that the eBay community should police itself, since that method would be more effective than official involvement. They presented the company as merely a venue for buyers and sellers to connect, and argued that their role as facilitator did not require the company taking steps to prevent fraud. eBay officials were apparently very reluctant to leave themselves open to legal action if they did assume the responsibility of fraud prevention and failed.

Finally, it appears that they realized that the future of the company could be affected by fraud, and started taking some measures to prevent it. They began using fraud detection software called FADE (Fraud Automated Detection Engine) that collects data from defrauded eBay members, and watches for similar patterns in new auctions. Since it was implemented, however, many members and security experts have expressed skepticism about its effectiveness.

eBay's anti-fraud measures have certainly not stopped fraud from occurring on eBay, which means that if you want engage in trading online protecting yourself in advance is a priority.


As recently as a couple of years ago, eBay officials offered a single response to concerns about auction fraud, i.e., recommending using the feedback system. (For each transaction on eBay and, the seller and the buyer are allowed to rate each other, either positively, negatively or neutrally, and also leave a short comment.) A determined scam artist can often find a way around the system by creating false positive feedback, but in the majority of auctions it does work well.

Using my Member Profile as an example, first look at the feedback score next to the member's ID. Generally speaking, the higher the number of transactions, the better the chances are that you aren't dealing with someone who will defraud you. However, there are plenty of honest people just starting out on eBay, so do consider giving them a chance if the item involved isn't too expensive.

At the top of the Member Profile a chart displays a snapshot of all of the feedback the member has received, broken down by positive, neutral and negative, and divided chronologically by the categories of Past Month, Past 6 Months, and Past 12 Months.

To the right of the chart you can see when the member signed up with eBay and what their ID history is, which tells you how long they have had this ID. If they changed it recently, it's possible they had a legitimate reason for doing so, as I did when I reverted to my maiden name. However, it also could indicate that the member is setting up a scam. Remember, you can always contact the member and asked why they changed their ID.

Their bid retractions, if any, will also be in their profile. Bid retractions don't necessarily mean you're dealing with a scammer, but someone who could affect your auction if you're the seller. The only negative experience I have had on eBay was a result of someone refusing to pay after the auction ended, not retracting their bid, but the end result is the same.

In the Member Profile view the feedback others have left. If there are glowing comments, consider the feedback score of the person leaving the comment. If it's high, chances are that it was a legitimate comment. If the members leaving positive feedback have low feedback scores themselves, they might be IDs created specifically to set up a scam. Look at the time period between the end of the auction and when the member left the positive feedback. If it seems unlikely that the transaction could have been completed in that amount of time, be on your guard.

Next, search for any negative feedback. Has the member responded to negative feedback and was their response plausible. Keep in mind that a seller who has hundreds or thousands of auctions and has only a few negative feedback reports is probably honest. It's impossible to please everyone when you have that volume of business.

Another thing to keep in mind is that people are afraid of receiving negative feedback in retaliation for leaving negative feedback. Even if you conducted your side of the transaction honorably, if you leave negative feedback because the other person treated you poorly, they can still leave negative feedback about (?) you in return, even if it's not deserved. Fear of negative retaliatory feedback can cause some people to leave positive feedback even when they really wanted to leave negative. You might be able to pick up on this by carefully looking at feedback. Did the person characterize the feedback as positive, but leave what was essentially a negative comment?

Also bear in mind that it is easy to check the wrong button! Does the feedback status match the comment? Does negative feedback actually have a glowing comment, or vice versa?

Protecting Yourself as a Buyer

Know the merchandise you're buying. An online auction is not the place to buy a a big-ticket item for the first time.

When you are the buyer, if you are not dealing with a member you have already bought from before, do your research. If you have any questions, ask them before bidding.

Be wary of participating in an auction in which the seller is in a foreign country. Many consumer protection laws will not apply.

Don't ever bid on an auction in which the seller only accepts cash or a wire transfer. That's a big red flag that chances are good you will never receive the merchandise. When possible, pay with a credit card, since you are protected by your credit card company.

For auctions involving items over $500, eBay recommends using their approved escrow service, It's a good idea to avoid using any other escrow service, due to a high incidence of fraudulent escrow services online.

If you are at all uneasy about the seller, ask yourself if you need the item enough to take a risk. Except in the case of very rare items, there will always be someone else along eventually selling the same thing.

Protecting Yourself as a Seller

Protecting yourself on eBay if you're the seller is a little easier than if you're the buyer. Simply don't send out merchandise until you have received payment. If someone pays by personal check and you have not done business with them before, wait until the check clears to send the merchandise out.

Be specific in your auction listing about what you will and will not accept in terms of payment and standing of the high bidder. I put this notice on all of my auctions:

If you are paying by personal check, please be aware that the merchandise will be not be sent out until your check clears. If you are paying by Paypal you must have a confirmed address. I reserve the right to refuse to sell to a winner with negative or zero feedback, or a winner who has changed his or her id within the last 30 days.

Of course, before you ship an item out to the winner of your auction, you also want to read their feedback and look for any red flags.

Have I Been Scammed?

Before assuming that the buyer/seller is scamming you, give them the benefit of the doubt. If someone seems to have misrepresented the item they auctioned, check the listing to make sure you didn't miss anything. If the item could have been damaged in shipping, contact the seller. Most sellers are eager to compensate you in some way, or refund the money if there's damage (unless it was specified in the listing).

If someone seems to be ignoring your emails, make sure your email client (Outlook Express, etc.) or ISP are not treating the person's email as spam and dumping it in your "Spam" or "Junk" folder, or blocking it altogether. If you are worried that your emails are not getting through due to the other person's spam filter, you might want to use eBay's contact form to diminish that possibility.

If you are the seller, you can send the buyer a payment reminder email through eBay. If this doesn't get a response, or you get a response from the buyer indicating that they are not going to pay, you file a Non-Paying Bidder Alert with eBay. This step is necessary to get credited for the fee that was charged at the close of the auction.

I've Been Scammed!

If it appears that you definitely have been defrauded take action quickly. If you are the buyer and have paid with a credit card, immediately contact your credit card company. Don't wait to go through eBay's steps for resolving the issue. Then go through eBay's procedure, as detailed below and perhaps post feedback that will warn other eBay members.

Recourse Suggested by eBay

If there is a dispute with another member, eBay recommends using an online mediation service like Square Trade. The success of this course of action is dependent on the other person being above board and equally eager to come to a peaceful solution.

eBay's only other recommendation if a problem has arisen with another member is to contact your credit card company, if you paid with a credit card.

eBay's Purchase Protection Program allows you to apply for reimbursement when you have been defrauded. Unfortunately the maximum you can be reimbursed is $200 (minus a $25 processing fee).

eBay's methods for providing you with recourse and compensation are lacking at this point. Their policies and disciplinary actions have also been found wanting by many users. Some charge that Power Sellers, those sellers who do at least $2,000 worth of business per month on eBay, are protected by eBay. Critics charge that eBay will not discipline these Power Sellers because their fees are a large part of eBay's business. According to a man who posted on an auction message board, when he complained to eBay about a Power Seller, eBay erased the negative feedback he had written about the seller.

I am personally still highly skeptical that they are committed to an effective fraud prevention strategy. That has not kept me from trading as both a buyer and a seller on eBay, however. At this point, it's best to take precautions before each transaction, and not rely on eBay to protect you before or after a transaction.



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